LAWMAKERS have criticised the manner in which the controversial Zimbabwe Consolidated Diamond Company (ZCDC) is constituted and operating, as they demand the enforcement of strict corrective measures within certain time limits.
By Obey Manayiti/Elias Mambo
The legislators also expressed concern at the low production figures in Chiadzwa, since the consolidation process took place.
This story is part of our ongoing ground-breaking investigation into the Marange alluvial diamonds discovery and subsequent plunder at various stages by state and non-state actors. The special series is supported by the Investigative Journalism Fund.
The company was formed last year after the government failed to renew mining licences of diamond companies operating in Chiadzwa, preferring to consolidate operations by merging the companies in a bid to stimulate growth, promote transparency and accountability.
However, while delivering a damning Mines and Energy committee report last week, committee chairperson Daniel Shumba painted a gloomy picture of the company starting from its formation, board composition, production levels and the manner it is being run.
Shumba said while other countries in the Southern African region with diamonds such as South Africa, Namibia and Botswana are doing well in that sector, Zimbabwe has failed mainly because of flawed operations.
ZCDC has five board members, where the Mines permanent secretary Francis Gudyanga is the acting board chairman, the report said.
It was, however, discovered that all except one of the board members, hail from Manicaland province, an outright violation of the Constitution of Zimbabwe. It was also noted in the report that almost 90% of the company’s executives were holding their positions in an acting capacity and without diamond mining experience.
The parliamentarians found that the ZCDC was operating as a subsidiary of the Zimbabwe Mining Development Corporation (ZMDC) when it is clear that the ZMDC board has no control over the company.
There was also a conflict of interest in that the ZCDC is chaired by Gudyanga while the company’s operations are overseen by the ZMDC board, which is, however, answerable to the permanent secretary. The Members of Parliament said this was a clear violation of good corporate governance.
“Nepotism and tribalism were the criteria used in appointing the board of ZCDC. All of them hail from Manicaland and there is no illustration of gender representation. This clearly violates sections 17 and 18 of the Constitution which promote gender balance and fair regional representation respectively,” the report said.
The report also said there were problems with the manner in which the company was formed as it was established as a private company under the Companies Act.
Turning to diamond production, the report observed that the ZCDC was performing badly to an extent that it only managed to produce just below one million carats in 2016 contrary to the projections set during its formative stages.
According to the report, previous annual projections were six million carats. Diamond mining companies operating in Chiadzwa produced approximately 2,3 million carats before they were ordered to cease operations to pave way for the consolidation process last year.
The report said ZCDC was hugely under-capitalised and did not have adequate machinery and equipment, resulting in its poor performance.
“As a result, ZCDC was hiring and sub-contracting most of its mining equipment and machinery, and operations,” read the report.
“The committee noted that the two mining operations of ZCDC relied heavily on diesel generators because they are not connected to the national power grid.”
The report noted that the ZCDC could not afford to borrow from the local financial market given the high interest rates, but it was also difficult for the company to scout for investors because of the low investor confidence following the closure of the former diamond mining companies.
As a result, the report said government must be consistent in the implementation of its policies.
Another contentious issue was the ZCDC’s involvement in gold mining at Gache-Gache at a time it is failing to fully operationalise diamond mining and its threadbare operating capital.
Among its resolutions, the report called for ZCDC to be properly constituted with the relevant ministry bringing before Parliament a bill to regulate diamond mining operations by the company in line with section 315 (2)(c) of the Constitution by year end.
The report said the ZCDC board should be dissolved immediately and that the company should now solely focus on diamond production, something that should be implemented within a month.
It was also recommended that the company be managed by skilled personnel with knowledge of the diamond sector and the resolution must be implemented within three months.